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Regulation, Taxes, and Share Repurchases in the United Kingdom

  • P. Raghavendra Rau

    (Purdue University)

  • Theo Vermaelen


We examine share repurchase activity in the United Kingdom over a period when the tax and regulatory environment changed drastically. We find that the form and intensity of repurchase activity in the United Kingdom is influenced by the tax consequences for pension funds. We also find that firms announcing share repurchases earn smaller excess returns, both in the short run and the long run, than those earned by firms in the United States. This is because of regulatory provisions in the United Kingdom that make it less likely that firms can use superior information to buy back shares when their shares are undervalued.

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Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 75 (2002)
Issue (Month): 2 (April)
Pages: 245-282

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Handle: RePEc:ucp:jnlbus:v:75:y:2002:i:2:p:245-282
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